Arbitrage opportunities exist in foreign exchange markets from "summary" of International Money and Finance by Michael Melvin
Arbitrage opportunities arise in foreign exchange markets due to the presence of cross-currency exchange rates. These rates represent the prices at which one currency can be exchanged for another. Discrepancies in these exchange rates across different markets create opportunities for arbitrageurs to profit from the price differentials.
Arbitrage in foreign exchange markets involves taking advantage of these price differences by simultaneously buying and selling currencies to make a risk-free profit. For example, an arbitrageur might notice that the exchange rate for the euro to the US dollar is higher in one market compared to another. By buying euros in the market with the lower exchange rate and selling them in the market wi...
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